Music Industry Data: Sales Up, Piracy Down... But It's Not Because Of Any 'Anti-Piracy' Efforts

from the let's-walk-this-through dept

A few folks have sent over variations on two different reports concerning the music industry, with some suggesting that this is "proof" that the recording industry's "war on piracy" has been effective on two fronts: increasing sales and reducing piracy. Of course, for many years, we've questioned whether or not reducing piracy actually increases sales, so we looked closely at the numbers and they don't seem to say what some people think they're saying. The Hollywood Reporter has a good summary of both reports. One comes from IFPI, celebrating that "global recorded music revenue" rose 0.3% in 2012. That is, obviously, a tiny increase, but it is an increase. Of course, as we've noted, "recorded" music revenue is merely one piece of the wider music industry ecosystem -- and that entire ecosystem has been growing for quite some time.

The second report comes from one of the industry's favorite researchers, NPD, claiming a massive decline in music file sharing (based on consumer surveys). I've found NPD's data to be suspect in the past, but let's just assume this is true. Then, can we reach the conclusion that the industry's anti-piracy efforts both worked and that it led to increased sales?

Actually... no. Not even close. We can see this pretty clearly just by looking beyond the recorded music market, to the wider file sharing space. Various reports have made it clear that widespread file sharing (mostly of infringing content) has continued to grow quite rapidly during the same time period. Sandvine reports (pdf) that BitTorrent traffic increased 40% over the same basic time frame. Or, zero in on a different market beyond music. How about software? The BSA's annual report continues to show increases in "piracy."

What does that say? Well, if wider anti-piracy campaigns were effective, we wouldn't just be seeing a decline in music infringement. We'd see similar declines across the board. But the overall space and some other, similar, markets are showing increases in infringing content spreading.

That leads us to the much more reasonable hypothesis: the reason that music piracy is down and revenue is up is because the industry has finally started allowing more innovation into the market. Not surprisingly, this is exactly what we've been arguing for years. If you let the tech industry create useful new services that better provide the public with what they want, you get services and products that people are willing to pay for. And when that happens, infringement decreases, because the legitimate and authorized services are better than infringing. It's why music infringement fell off a cliff in Sweden when Spotify launched there, despite also being the home of The Pirate Bay. Notably, when music infringement plummeted in Sweden, other types of infringement did not similarly drop.

In other words, for all the complaints about these new services, and the many, many attempts to hold them back or neuter them, letting new services grow and thrive seems to be the best "anti-piracy" measure that the record labels could have used. And yet it still thinks it needs to focus on punishing fans and limiting services.

I'm interested in data regarding movies in the US and the advent of streaming Netflix. You need to weed out the influence of theatrical releases since people flow in flocks to those due to release windows, expensive tickets. What about the piracy rates of movies widely available through Netflix for instance? I'll bet they are down by a decent notch. If this is true it only reinforces the theory that good availability for low pricing is what's driving piracy down. I for one will probably not download any movie available at Netflix unless I 1- want to have it and it's not available, 2- want to have it but it's too expensive, 3- want to watch on a trip to nowhere (no internet connection) or 4- want to give a copy to a friend so he/she can watch.

Re: Ateention OTTB -- YOU GOT IT "SHADOW DRAGON":

"Ateention OTTB
Priacy is Human Nature,Accept it and move on."

----------------

Spoken like a true savage. -- "Human nature" is what civilized people struggle to keep chained up. Otherwise, in a "state of nature", we'd all be in small family tribes bashing each other over the head with clubs. The biggest and most brutish win.

If you won't be civilized, Nature Boy, and NOT take what doesn't belong to you, the rest of us may lock you up.

Re: Re: Ateention OTTB -- YOU GOT IT "SHADOW DRAGON":

Oooh I get it! You don't know shit about evolution, or what it means to be a social animal yourself.

See, the fact that there are six or seven billion humans is lost on you, because you can't grasp what those numbers mean. You can't understand what Hamilton's inclusive fitness criterion means about evolution. You don't understand how honed the human instinct for cooperation is. You're so sociopathic you can't understand how comes it's evolutionarily better to cooperate than compete, and you're too dim to go read that it's been definitively proven.

tl;dr : You're either an idiot, a sociopath or both. You're welcome to prove it every day all over again, as TechDirt is against censorship.

Economy

Somewhat unrelated, but people should understand that piracy in the US can not affect the US economy. That $20 I didn't spend on a CD is still spent on something, perhaps a meal, or perhaps a video game. All US piracy can potentially do is redistribute money in the economy.

Now international piracy _can_ affect the US economy. A Chinese or Indian or Swedish dollar that is not spent on a US CD, potentially goes to a local business.

Re: Economy

This holds especially true when you consider that most pirates are also in income brackets where almost 100% of income is spent immediately rather than being hoarded in offshore investment funds like, say, the executives who run the music industry.

If they didn't spend it on a new CD, they spent it on a pizza, or groceries, or fuel, or some other form of electronic entertainment such as the PC hardware that facilitates their piracy in the first place. One thing's for sure, though: stopping piracy won't magically line their pocket with $30 and the desire to spend it on a CD.

Spotify

I listen to about 95% of my music through spotify, and I pay the $5 a month for no commercials. The other 5% is from driving around and listening to the radio. So pretty much spotify is the reason I don't need to buy/download/whatever music anymore, not anything else that the music industry might claim.

Re:

"Of course he was wrong."

Yes that 0.3% rise in sales must only be due to "piracy crackdowns" and can't have anything to do with the many other factors to consider. It can only be the cherry-picked factor you prefer, the same cherry-picked factor you've been blaming for dropping sales in the first place (despite all evidence to the contrary). That's a lovely bubble you have.

Getting a sales rise that amounts to a rounding error was also certainly worth all the attempts to shut down half the internet, kill new technologies, attack innocent parties and all the other crap you've been supporting rather than, say, giving people what they'd actually been demanding all that time. Bravo. /s

"Something any clown-shoed moron on the street could have told you."

Well, you are the expert in those people.

"Demand is steady"

Citation?

"some will indeed decide to purchase"

...and some won't. Which is why other methods of getting music to them other than selling copies are being so successful at getting people to not pirate and use those services - which can also translate into more sales.

Re:

Let's look at this scientifically. Anti-piracy tactics have been put in place across the board; music, movies, games, and books all have this anti-piracy crap in them. So, if as you say the anti-piracy tactics were working then sales would be up across the board, right? But they're not. Why is that then?

Could it be other variables that you refuse to accept? Like say the creation of easier, legal methods like Spotify?

I'm sorry, but the numbers all add up to exactly what has been said here over and over again. You just refuse to take all the numbers into account.

Re:

Mike as said, correctly, for years that sales wouldn't increase because "piracy crackdowns", never that sales wouldn't increase simultaneously with "piracy crackdowns". I understand that the difference is subtle, but it is valid all the same and any ignorance of it is depiction.

Re:

Demand is steady; if the desired content can not easily be had for free, some will indeed decide to purchase.
Right, because going without is no option with such stellar content like Transformers 3. Keep dreaming, skintube.

Re:

You morons love to do exactly what you said. TOTAL revenue on the entertainment business has been increasing steadily IN SPITE OF piracy. Hollywood has been breaking records after records every damn year. And it's clear that alternatives such as spotify and others that increased availability have been successful. If any anti-piracy measure was successful we'd see similar decreases in piracy of ALL types which clearly is NOT happening.

But you have some sort of mental disorder so you'll ignore reality and twist it to your liking eh? Have fun in your dreamland.

Uh no.

Sorry but if your argument were correct, then piracy metrics would drop too. After all, that wonderful innovation you celebrate should be worth something.

Alas, much of what you call innovation is just piracy in a different skin. You continue to see MegaUpload as some Internet version of the Polio vaccine when it's really just a way to pay people for uploading pirated content.

The real answer is that we just don't have the right numbers to come up with a consistent comparison.

The fact is that good prosecutions help dissuade the people on the fence from joining the bad element that continue to enrich the billionaires at Big Hardware, Big Search and Big Piracy. This Six Strike law will be just another arrow to help people recognize that they can't just decide for themselves that something should be free.

Re: Uh no.

Alas, much of what you call innovation is just piracy in a different skin.

Alas, much of what you call piracy is just innovation in an innovative skin.

At the beginning of the digital revolution it was common to say that digital was killing music. The reality is that digital is saving music.” - Edgar Berger, chief executive of the international arm of Sony Music Entertainment

Re: Uh no.

"You [Mike] continue to see MegaUpload as some Internet version of the Polio vaccine when it's really just a way to pay people for uploading pirated content."

No, Mike's focus is on grifters who tap "income streams" that should rightly go to those who created content. See the just prior piece where he cheers the escape from justice of a grifter who got $351,000 just for linking to stolen sports feeds. I believe that to Mike the consumers are incidental: he's far more interested in re-distributing income to his grifter pals who he calls "innovators", and THAT'S why he constantly defends Megaupload, and "file sharing" sites.

Re: Re: Uh no.

Re: Uh no.

"This Six Strike law

I thought Six Strikes was a "voluntary" agreement between ISPs and the media conglomerates. I don't remember Six Strikes being debated in the US Congress, or of it being signed into law.
Even if it was a law, it would be one of the worst laws ever designed, in that you're punished upon accusation and there is literally no way to prove your innocence.

something that is a real piss-take is info from IFPI stating that since TPB was blocked in various countries, copyright infringement has dropped. apart from this being, in my opinion, complete bollocks, it is only put out so that the gullible politicians in these various countries can sing the praises of what censorship achieved. it will never stop or even slow file sharing but will serve to restrict the freedoms and privacy of ordinary citizens, not that it matters to any politician to be honest, of course. when the music and movie industries actually admit that what they have been doing for the last 5 decades has been achieving nothing for them other than shooting them multiple times in both feet, then we will see a positive increase in media sales. remember, however, that if anyone actually believes that this is the first in 14 years that the music industry has made a profit, wake up and smell the coffee, please! had it not been a profitable business, it would have folded long ago, don't you worry about that!!

Re: Re:

When I was 12, I went to maths class and in there, learned about Venn diagrams. Sounds like the troll must have skipped that class. Musical copyright infringement would be a subset of general copyright infringement.

Re: Re: Re:

Re:

"So which is it Masnick?"

It must be terribly embarrassing to think you're cleverly highlighting an inconsistency in Mike's post, and then realise you just flat-out misunderstood it. You'd think this might teach you caution, but I doubt it...

Re: OOTB?

I'm glad you asked!

"OOTB?" -- The answer here is variously YES, NO, and 42.

"Do you ever argue with valid points and citations?" -- YES, my points are ALL valid, aligned with facts, or so I believe. Even my digs have a point. -- Citations? WELL, if you don't accept the ones Mike thinks he counters here, then I've no others on topic. But where does Mike have anything more than opinion here? HMM?

"Do you ever address the more than once (if that sometimes) in your rambles?" -- I can't parse this without an obvious subject. That'd be some sort of noun. Clearly YOU are the one "rambling" pointlessly and just don't know it.

Re: Re: OOTB?

"YES, my points are ALL valid, aligned with facts, or so I believe. Even my digs have a point. -- Citations? WELL, if you don't accept the ones Mike thinks he counters here, then I've no others on topic. But where does Mike have anything more than opinion here? HMM?"

You automatically think you're right, and then admit you don't bother having any citations or sources of any kind to back up what you think.

Reading your comment is like reading All Star Batman and Robin comics. Random words capitalized and makes as much as sense (read, not at all)

Re: Re: Re: OOTB?

"Reading your comment is like reading All Star Batman and Robin comics. Random words capitalized and makes as much as sense (read, not at all)"

Whoa, whoa, whoa. Rikuo, I usually agree with what you say, but on this sir I must take a stand against you. All Star Batman and Robin made plenty of sense. From a Frank Miller perspective. Not too mention the perspective of the man who introduced himself as, and I quote, "The Goddamn Batman."

Re: Re: OOTB?

But just because Big Media is bad doesn't make Little Pirates right. My admonition to NOT STEAL applies equally to both groups.

Key words..."NOT STEAL." Piracy is NEVER stealing. If I go into an art gallery and take a painting, that is stealing. If I take a picture of the painting, and post it online, that's (sort of) piracy. Heck, even if I made an exact copy of the painting I still never stole the painting.

If your points are all aligned with "facts" how can you ignore this fact? There can be no debate on this topic. It's like saying that driving without your seatbelt is the same thing as murder. While the ultimate result may be similar (someone dying) the two things are NOT the same, ever.

If you want to engage in an actual debate on a topic it helps to learn the basic concepts first. I recommend looking up the Wikipedia page on "Copyright Infringement", read the link to Dowling v. United States where the courts ruled specifically that copyright infringement is not theft. Note specifically that, under the law, the owner must be "wholly deprived" of the object in question to constitute theft, which piracy never does.

You can believe your points are aligned with facts all you want. Until you learn what a fact is, however, all your opinions are worthless. Extra credit assignment: learn the difference between opinions and facts. Hint: they aren't the same.

"For minor counter: the rise of Spotify coincided with efforts against The Pirate Bay. But you cherry pick it as if isolated."

Yet, you morons do the opposite, claiming that doomed efforts against file sharing have had the effect and totally ignore the fact that acceptable legal services were actually offered (especially outside of the US, where the industry normally block from accepting paying customers). No, it can't be the fact that people are allowed to pay for an decent service for a change, it has to be the extortion letters and the shutting down of services that half your lost customer base didn't use in the first place!

If you're going to argue, at least stop making the same fallacies you project on to others.

Are you colour-blind? Because that's the only excuse I'd accept for you saying "no actual data". Certain words in the article are coloured blue. That means they're links, to sources that back up what Mike's saying.

No, Mike cites the articles and studies he's basing his opinion on. Even if you disagree, you can look at his links, and offer counterpoints/alternative evidence in the same way. You can question his sources, disagree with his conclusions or question his motives, but you can't claim they're baseless.

You, on the other hand, not only fail to cite any of your bare assertions, but you're doing exactly the same thing you accuse Mike of doing! You attack him for not having data - but you have no data to base your own ranting idiocy upon! You're a hypocrite and moron, on top of being a child prone to tantrums as your response to me ably demonstrates.

Big Media (sounds like something Bob would rally against) spends millions of dollars suing or threatening to sue everyone they can get their hands on, including their grandmothers, their printers, and their deceased (not to mention big media itself). They spend millions of dollars lobbying the government to put in place laws that take away rights of others. They spend millions of dollars on studies that can easily be proven false and are, quickly. They spend millions on "educational" campaigns that are instantly recognizable as bias baloney. All this leads to more and more people to go elsewhere for their entertainment.

Honestly, I wouldn't qualify just-holding-up as a big win. That sounds like a big loss to me since they seem to be doing everything in their power to kill themselves.

WHERE DO WE DIFFER ON ANYTHING in all of our respective comments, then?

I'm NOT for Big Media. -- OH, I know where we differ! I'm for HANGING THEM, until we can get them under control with mere confiscatory taxation, while you're for continuing to let them accumulate money and power.

But just because Big Media is bad doesn't make Little Pirates right. My admonition to NOT STEAL applies equally to both groups.

dunno i read in another article i think in arstechnica were they said yeah if wi compare 25 or less digital legal distributions IN USA ONLY, compared to 100 digital legal IN ALL THE WORLD, that should increase the gains dont you think so, so mic was sayin all this tiem give them digital they will buy, now they give digital people will start to buy, same goes for steam vs consoles steam overal seems like the saivour of pc gamming why is that because of the 75% dicount and games unde 10 dolars, and i am talking about AAA games which are 100+ millon to make

Many countries are growing their Internet usage, but it isn't always through traditional laptop/desktop users. Mobile users (tablets and phones) on the dramatic rise.

So which other markets - which software? OS's or apps? Mobile apps or desktop/laptop software? Movies are easy to stream now on mobile devices too. No need for DVD burners or laptop/desktop devices.

The devil is in the details.

If the "industries" could only look at the damn details they'd maybe get a clue and maybe they'd see what people want, which isn't free, just unlocked and reasonably priced.

Personally, I like DVD's, I don't have to deal with stupid pop-ups or slow internet access or grainy video or even have to subscribe to a limited selection.

I buy what I like or that's cheap and worth giving a try. If it's not cheap and I still want to try it (ie: $20) then I try the library. If it is good, I'll wait until it is reasonable, at $10. Wait longer and you get 2/$10 or 3/$10 or 2/$20 or 2/$15. If they are worth it, I buy it. I don't bother torrenting or dealing with streaming delays and pop-ups of casino sites or dating sies.

Point is - give the damn options - full selection, reasonable price. Sometimes I use iTunes, but I like the extra features and being able to watch part one night and the other part a few nights later -- infant crying makes that option a necessity and iTunes ain't configured for that option!

Darn, the trolls are truely coming out to play tonight. The amount of "shoot the man and let the ball be untill your enemy team is massacred" is boring. BYON (Bring Your Own Numbers) if you wanna play.

Back of the Envelope Math

So, the volume of downloaded content is down 26%, sales are up 0.3%. The portion of people in the US that downloads illegally is about 25%. If we assume they download no more than is bought per person, that means that when averaged over the whole 26% becomes 7.75%. That lets us calculate an upper limit of 1 lost sale in 26 illegal downloads. This of course hinges on a series of assumptions that are in all cases extremely conservative and likely to substantially overestimate this number, so the actual average is probably much lower than the upper limit of 1/26.

Re: Back of the Envelope Math

How reliable is the NPD Report?

The report was based on interviewing people who said that they pirated less a year later. More people were sued for using BitTorrent in 2012 than 2011. What is the reasoning behind believing that people said they pirated less than the year before? Regardless, if an artist wants to give away their music, that is great. The current situation on the internet forces an artist to give away their music. Copyright is a human right. Article 27 of the Universal Declaration on Human Rights (2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

Re: How reliable is the NPD Report?

The report was based on interviewing people who said that they pirated less a year later.

And... how reliable are in-person interviews on subjects like that? Answer? Not reliable at all. Especially when discussing illegal activity for which there have been lawsuits. People are MUCH less likely to admit that they did it, even if they did. Methodology suggests piracy is actually higher than NPD predicts.

Copyright is a human right. Article 27 of the Universal Declaration on Human Rights (2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

Why do you always leave out section (1) of Article 27? That one reads: "Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits."

Also, why do you leave out the fact that the UN itself has said that what they are talking about in Article 27(2) is NOT copyright:

"It is therefore important not to equate intellectual property rights with the human right recognized..."

mmm. want to comment on this but the essay written was kind of off topic.

Related is how we educate ourselves about history and when lack of such historical education we repeat same mistakes. Will wait for a cultural editing (related to education) topic to post. (want to stay on topic)